AVIC Electronics (600372) 2019 Semi-annual Report Comment: Slight increase in net profit optimistic about company asset injection

AVIC Electronics (600372) 2019 Semi-annual Report Comment: Slight increase in net profit optimistic about company asset injection

Investment Highlights Net profit is growing by 14% annually.

In the first half of 2019, the company realized operating income of 34.

USD 3.1 billion, an increase of 15 per year.

41%; Realize net profit attributable to shareholders of listed companies.

7 billion, an annual increase of 14.

42%; non-net profit attributable to shareholders of listed companies.

$ 4.1 billion, an increase of 1 per year.

52 times; realized profit of 0.

0965 yuan.

In the second quarter of 2019, the company achieved operating income21.

68ppm, an increase of 4 per year.

7%, an increase of 71 from the previous month.

8%; Net profit attributable to shareholders of the listed company.

07 billion, a decline of 0 every year.

3%, an increase of 6 from the previous month.

53 times; realized expected return of 0.

12 yuan.

The domestic military aircraft is being upgraded and the avionics market is developing rapidly.

The avionics system is equivalent to the “brain” of an aircraft, and it is the key to improving the aviation defense combat capability and combat effectiveness.

While the impact of avionics systems on the overall performance of aircraft continues to increase, the cost of avionics systems as a percentage of total aircraft manufacturing costs has also skyrocketed: from 10% of F-4 in the 1960s and 21% of F-15C in the 1970s30% of F-16C in the mid-1980s and 40-50% of EF-2000 and F-22 in the 1990s.

According to “Aeronautical Knowledge” statistics, F-35 avionics costs have accounted for 60%.

The remaining three percent of combat aircraft are three generations of combat aircraft.

According to “WorldAirForce2019” issued by “Flying International”, among other combat aircraft, there are 561 J-7 and J-8 second-generation combat aircraft, accounting for 34% of combat aircraft.

5%; three generations of combat aircraft J-10 have 260, J-11 / 15su-27 / 30/35 has 391, a total of 651, accounting for 40% of China’s combat aircraft.

1%.

US combat aircraft are basically three or more generations of combat aircraft, and have four generations of combat aircraft F-22 178, F-35 214.

With the maturity of the third generation of combat aircraft, the new generation of fighter -16, fighter -10c and five generations of stealth fighter fighter -20 successively into service, the next generation of fighter aircraft will be gradually retired.

The continuous service of the third-generation combat aircraft has significantly increased the demand for avionics systems.

Asset injection is worth looking forward to.

The company hosts 14 enterprises and institutions of the airborne company, including 5 key scientific research institutes. The revenue scale of the hosting company 杭州桑拿养生会所 is three times that of AVIC.

The transformation of military scientific research institutes was started to clear the obstacles injected by scientific research institutes. The transformation of military scientific research institutes into enterprise reform goals: the first batch of military industrial scientific research institutes in production and operation completed the transformation in 2018, and other production and operational military scientific research institutes were basically completed in 2020Conversion.

In addition, the avionics asset profitability is better than other types of military assets, and the injection will significantly increase the performance of listed companies.

Investment Advice.

The company is a conventional avionics leader. The company has clearly benefited from the rapid upgrading of previous military aircraft.

In addition, the expected size of the company’s asset injection is determined, which will significantly increase the company’s performance.

We expect the company’s annual revenue in 2019 and 2020 to be 0.

34 yuan, 0.

41 yuan, the current corresponding PE is 40 times and 34 times, maintaining the company’s “recommended” investment rating. Risk warning: The demand for military products is sluggish, and asset injections exceed expectations.

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